Facebook befriends Wall Street with $5-billion IPO filing

NEW YORK: Facebook, the social-networking website that in eight years changed the way the world communicates, on Wednesday, filed to raise $5 billion in the largest internet initial public offer (IPO) on record. Facebook's $5 billion fund-raising target is only preliminary, however, and can be increased based on investor interest. Initial estimates held that Facebook would seek to raise at least $10 billion. The offer could value the company at up to $100 billion.

The paperwork filed on Wednesday provided the first glimpse of the financial details of the web giant launched by Mark Zuckerberg from his Harvard University dorm room. Zuckerberg penned a letter to investors outlining what he said were the core values of Facebook and said it "was not originally created to be a company".

"It was built to accomplish a social mission - to make the world more open and connected," the Facebook chief executive said in the letter accompanying the filing with the US Securities and Exchange Commission (SEC).Facebook said it will list on Wall Street as 'FB' but did not set a date for when it would begin trading or specify whether it would be on the Nasdaq or the New York Stock Exchange.

Gartner technology analyst Michael Gartenberg did not expect the stock market debut to have much impact on the average user, but said the extra cash would allow the firm to grow and give it a new edge on competitors. At $5 billion, the IPO would be the largest ever by a technology company, eclipsing the $1.9 billion raised by search giant Google when it went public in 2004 at a valuation of $23 billion.

The Palo Alto, California-based company reported net income of $668 million last year, up from $372 million the previous year. Revenue nearly doubled to $3.7 billion in 2011, with most of it coming from targeted advertising gleaned from personal information shared by the hundreds of millions of users of the platform.

Following the model of Google co-founders Larry Page and Sergey Brin, Zuckerberg set up two classes of stock that will ensure he retains control as the sometimes-conflicting demands of Wall Street exert new pressures. He will have the final say on how nearly 57% of stock votes, according to the filing.

Protesters used Facebook to help coordinate last year's Arab uprisings, and China has blocked the site since 2009, blaming both Facebook and micro-blogging website Twitter for fanning unrest in the northwestern Xinjiang region.

Facebook's value has been estimated at $75 billion and $100 billion.

A market capitalization of $100 billion would put Facebook on a par with McDonald's ($101 billion), well ahead of Boeing ($55 billion) but behind Apple ($426 billion) and Google ($189 billion).

Zuckerberg, whose net worth has been estimated at $17.5 billion by Forbes magazine, is the largest individual shareholder in Facebook and controls 57 percent of voting shares, according to the SEC filing.

But he was not the highest paid.

Sheryl Sandberg, who was lured away from Google four years ago to serve as Facebook's chief operating officer, made more than $30.5 million last year while vice president of engineering Mark Schroepfer pulled in $24.7 million.

Zuckerberg's total package was $1.49 million.

Gartenberg said Facebook's IPO would be the largest by a technology company in 2012 by far, but others contemplating going public will be closely watching how it fares. Facebook shares are not expected to begin trading for several months, but the excitement was already running high, with the announcement - along with recent manufacturing growth - sending stocks up on Wednesday.